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An entrepreneur must decide if he should bid to acquire a commercial bakery, Cake Masters, given his objectives in his search and his investors' expected returns of 20-30 per cent. If he bids, he must decide how much to bid and in what form of consideration. Students are introduced to valuation methodologies and will evaluate an acquisition or opportunity, understand the process of acquiring a small company, learn how preceding transactions are considered and learn about discounted cash flow analysis.

In this case students must ascertain what financial ratios they recommend the company focus on and they must also decide how best to communicate, explain, and bring to life those metrics so that the company's cadre of non-financial middle managers can most easily understand the significance of, and internalize the insights from, those ratios. Embedded in this task, students must: (1) understand the nature of the company insights afforded by each of the potential financial metrics presented; (2) make a judgment as to which subset of financial metrics is (a) most applicable to a group of non- financial middle managers and (b) most representative of bankers' and shareholders' interests; and (3) develop a plan for communicating to a group of non-financial, middle managers the subset of financial metrics they have selected.

Students are presented with the balance sheet, income statement, and selected footnotes from Berkshire Hathaway's 2004 annual report and are asked to respond to several questions regarding information in the materials. Questions center around the company's classification of its investments as held-to-maturity, available for sale, or trading securities and the effect of the accounting for the company's securities on its balance sheet and income statement. "Berkshire Hathaway-Intercorporate Investments (B)" (UV1026) can be used as a supplement to this case.

Portrays the difficult situation that Crear Vale la Pena (CVLP) underwent in 2002 as a result of the 2001 Argentine economic crisis. Also describes the corrective measures designed to overcome the crisis for the organization to continue its operations, considering its specific goals and the stakeholder groups involved in the Community Cultural Centers (CCCs) it had created. Describes CVLP's evolution under Ines Sanguinetti's leadership, as well as her vision of art as a transforming force for social identity development. The foundation first offered an art course embedded in a school support program. It later expanded into several art, communication, and social organization workshops delivered at CCCs. Funded by public and private donations, CVLP offered art education to over 4,800 students while training more than 45 teachers and 120 individuals in art-related crafts. In the late 1990s, Argentina succumbed to a severe economic crisis, featuring a significant rise in unemployment and poverty rates. A sharp drop in demand and, hence, in corporate and individual income consequently affected domestic nonprofits, especially those that relied on private and institutional funding. This economic and financial blow suddenly struck CVLP harder when its key donor, accounting for 80% of its revenues, announced a 50% contribution cut for the next period. To deal with this turn of events, CVLP's executive committee met to analyze several courses of action using projected financial statements as a strategic tool.

Internet service firm Livedoor allegedly took advantage of loopholes in securities trading laws to swell the amount of assets held by the firm and its president, Horie, who led the Livedoor group. Livedoor was established in April 1996 with 6 million yen (US$55,798.38) in capital. It made its stock market debut in April 2000, with a stock market value of 57.2 billion yen. Its market capitalization surged to 830 billion yen (US$6.88 billion) as of December 2005, a 15-fold spike. Behind the steep jump in the corporate value were a series of highly tactical moves intended to boost the stock prices of the parent and group firms. Livedoor's strategy essentially focused on how to attract speculative investment money from individual investors, largely ignoring institutional players. Livedoor's operations turned out to be a kind of "money game" under the guise of efforts to challenge the establishment. Where did Livedoor deviate from the path of fair business, and what kind of illegality was involved in its activities? Shedding light on these questions should help both companies and investors make more constructive use of the securities and capital markets.

Private equity investors in Asia are fine-tuning the art of the turnaround using three principal strategies.

This case provides financial ratios and common-size balance sheets for 13 "mystery" companies. Students are asked to match each mystery company's data to one of the 13 industries provided.

Founded in 1987, Taiwan Semiconductor Manufacturing Co. (TSMC) was the world's first pure foundry, focused solely on the manufacturing of semiconductors. Operating in the cyclical semiconductor market, the company managed to grow rapidly and to become the world's 8th largest semiconductor manufacturer with more than a 50% market share in the foundry business. In the company's early days, TSMC management focused on manufacturing excellence and technology leadership. As competition in the sector intensified in the late 1990s, the company began to focus on customer service to differentiate itself further from companies like UMC, its next-door neighbor and closest competitor, and the rapidly growing Chinese foundries. The company invested heavily in the development of innovative, value-added services and proprietary information systems that would facilitate better communication and improve customer service, putting in place eCommerce applications such as eFoundry and Enterprise Supply Chain Management suites. TSMC management believed that customers, typically U.S.-based integrated circuit design houses facing high financial stakes, rapid technological innovations, short product life cycles, and intensive competition, would choose a foundry business partner based on quality, trustworthiness, and reputation, as opposed to price only. Could superior customer service make an impact in a capital-intensive, process- and quality- oriented industry such as the semiconductor industry, or would TSMC have to compete on price? Explores these issues, as well as other factors affecting TSMC's strategic path as it moves forward in the mid-2000s.

Steve Papa, CEO of Endeca Technologies, must decide whether to expand into a new market with a new application of his company's technology. Endeca has experienced significant success with its information access software in the online retail industry, and in September 2004 is poised to enter similar industries with similar products. However, it also faces an opportunity to create a unique solution for the manufacturing industry, a market the company knows little about and that has proven difficult to enter in the past. Which expansion strategy should Papa choose? Although the manufacturing market would yield a much higher average deal size, significant uncertainty surrounded a move away from Endeca's core business. It would impact the company's sales practices, organizational structure, product requirements, and decisions about whether to partner with other companies in the field. Taylor Hunte Industries, a Fortune 500 giant in the manufacturing industry, has just invited Endeca to submit a request for proposal--due in just 10 days.

In early 2007, two partners in an Oklahoma medical practice must reconcile their booming urology business with declines in practice cash flow. The case highlights the difference between cash flow and accounting profits, as well as the common negative cash-flow effects of growth. It provides a straightforward introduction to simple financial-statement modeling and an opportunity to build intuition on the importance of cash flow to business owners. The case is particularly suited for an audience with a professional business-practice perspective.

Spreadsheet for case UV1403

This case provides an opportunity for students to (1) understand the calculation of a number of basic financial ratios, (2) analyze a set of common-size balance sheets and several financial ratio metrics, (3) hypothesize how some basic understanding of an industry should be reflected in certain financial indicators, and (4) present to their classmates a rationale for their pairings and to respond to questions from their classmates. If instructors are so inclined, use of this case also provides an opportunity to (1) discuss an organizing framework for the focal ratios, (2) present the concepts of financial leverage and the DuPont ratio model, and (3) introduce students to some of the published sources for industry metrics.

Spreadsheet Supplement for case 206046

Using a comprehensive and simple example of a firm exposed to foreign exchange risk, interest rate risk, and commodity price risk, shows how to use corporate-value-at-risk to measure and manage a firm's global exposure to risk.

Lays out the steps, the timeline, and the process by which a company is sold. Focuses on the sale of companies with enterprise values greater than $100 million. These transactions are large enough to require the help of a financial adviser and attract both strategic and financial bidders. The sale process described is that of a private auction, including a confidential information memorandum and a "roadshow" to sell the high-yield debt needed to fund the transaction. Covers issues such as identifying and attracting bidders; dealing with the concerns of the managers of the selling company; negotiating issues in a definitive merger agreement; and post-sale issues.

Supplements the (A) case.

Supplements the (A) case.

Spreadsheet Supplement for case 206108

Spreadsheet Supplement for case 206101.

Explores the importance of private equity firms in merger and acquisitions activity around the globe. In many countries, these firms now account for one quarter of the total merger and acquisition activity of all firms. The larger private equity firms generate fees for investment banking firms that exceed $350 million per year. Shows how the general partners of the fund financing the acquisition; the limited partners of the fund financing the acquisition; and the management team running the acquired firm for the private equity sponsor share the shareholder value creation in a successful leveraged buyout sponsored by a private equity firm.